By Jaya Ramachandran
BONN (IDN) – While global estimates range between US$55 trillion and $93 trillion to stay within 2 degree Celsius of temperature increase by 2030-2035, developing countries in Asia alone need an estimated US$3.6 billion per annum up to 2030 to transition toward net zero emissions and increased resilience, according to ESCAP News.
If finance is to be scaled-up to these levels, it is essential to use lending and capital market channels to shore up resources to effectively tackle the impact of climate change, according to countries in Asia-Pacific which gathered on November 16 on the sidelines of global climate talks in Bonn to discuss opportunities to raise ambition to meet the goals of the Paris Agreement through innovative finance solutions. It was acknowledged that additional support from the international community was required to support this effort.
One of the key recommendations to emerge from the meeting, ESCAP News said, was the need to enable least-developed countries and Small Island developing states to lower the cost of capital, provide de-risking and scale solutions, and build awareness and capacity to overcome the barriers. Despite the challenges, some countries in Asia and the Pacific are successfully accessing international capital markets to further climate action.
According to the certification report accompanying its latest Green Bond issue, Fiji indicated that its insufficient technical expertise, human resources and financial readiness represent the most material issues interfering with its efforts and commitments to mitigate the effects of normal weather events and adapt to climate-change weather events.
In her intervention, United Nations Under-Secretary General and Executive Secretary of the United Nations Economic and Social Commission of Asia and the Pacific (ESCAP), Dr Shamshad Akhtar, voiced concern that, without stronger foundations, capital markets in the region risk losing out on the global reallocation of private funds toward climate-related investments.
Priority measures for the region include acceptance of the widely agreed Green Bond Principles in Asia and the Pacific and in each target country, the enforcement of disclosure and the reduction of issuance costs by borrowers, as well as the emergence of standardized terms for financial instruments.
Dr. Akhtar highlighted the importance of facilitating the emergence of a pipeline of specific projects that can be financed through green finance instruments.
“In a world awash with capital, it is paradoxical that finding sound investment opportunities remains a stumbling block. By building a pipeline of specific projects that can be financed through green finance instruments, the region will be equipped with a credible investment proposition for global private capital,” ESCAP News quoted her saying.
Equally important was the need to supplement the emergence of green projects with a grant facility to make up for the capital markets’ shortcomings in the target countries.
Dr. Akhtar underscored that many private borrowers risk foregoing the opportunity of raising funds through international bonds or loans, while relying on comparatively scarcer bank loans, given the additional burden put on them by international guidelines.
“Through a grant facility, the region could solve many of these shortcomings and support the emergence of a pipeline of new bond issues, while building up its local capital markets, thus capitalizing on such a development to create a positive feedback loop for longer term economic and social growth,” she added.
The meeting concluded with participants agreeing on the need to develop a clear Regional Action Agenda that unifies climate ambitions with making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.
To this end, ESCAP proposed, in partnership with UNFCCC and others, to support the formulation and implementation of a Regional Action Agenda.
In another meeting organized by the ESCAP in partnership with the other four UN regional commissions, on the sidelines of COP23, countries from Asia and the Pacific, Europe and the Middle-East explored opportunities for scaling up climate action to meet the ambitious targets set out in the Paris Agreement.
The high-level participants recognized the need to boost climate action across the region if the aim of staying within a 2 degrees Celsius of temperature increase is to be attained. If we maintain business-as-usual, rising seas could affect 1.4 Billion people by 2060.
Asia and the Pacific accounts for more than 50 per cent of global emissions, and while many countries in the region have ambitious climate plans, collective efforts under Nationally Determined Contributions (NDCs), are not nearly enough to meet the goals of the Paris Agreement. It has been estimated that humanity is left with a ‘carbon credit’ of between 150 and 1,050 GtCO2 to meet the Paris target.
However, at the current emission rate of 41 GtC02 per year, the lower limit of this range would be crossed in 4 years, and the midpoint of 600 GtCO2 would be passed in 15 years.
According to ESCAP News, in his keynote address, Hans Joachim Schellnhuber, Founder and Director, Potsdam Institute for Climate Impact Research, pointed out that in the Asia-Pacific region, population growth, environmental degradation and climate change could be a major challenge for the countries in the area.
“This is the negative future scenario. We have detailed these substantial risks in a major report for the Asian Development Bank just recently. But there’s a positive scenario too. Asia-Pacific could be at the forefront of human ingenuity to achieve change. This could really make the region a worldwide innovation leader,” he said.
Dr. Akhtar stressed vulnerable countries have a critical stake in ensuring that global emissions trajectories are corrected downward. Many countries in the region are showing leadership in putting into place policies and measures to mitigate emissions and to strengthen resilience. Carbon markets and their increased linkages across national boundaries can play a critical role to achieve these climate ambitions at least-cost.
“NDCs show countries are willing to raise their ambition, but need more financial, technological and capacity-building support. Regional commissions are committed to supporting this effort by convening all the relevant actors to deliver more ambitious policies to mitigate climate change, strengthen regional partnerships, and promote South-South co-operation,” said Dr. Akhtar.
“ESCAP will continue to support the development of the energy policy framework in the region to achieve Sustainable Development Goal 7. We can strengthen regional co-operation in carbon pricing to further exploit cost savings. And we will step up our efforts with the financial sector to ease countries’ barriers to access to finance and risk-transfer measures,” she added.
Sun Zhen, Deputy Director General on Climate Change Affairs, National Development and Reform Commission, China provided his perspective: “China is strongly committed to cope with climate change and to meet our greenhouse gas control commitments. Our experience shows that if we make the right political decisions and trust the potential of low carbon development, our policies should not limit economic growth. Rather they will create opportunities for sustainable, climate friendly and green growth.”
Participants also highlighted the key role of the UN regional commissions in supporting implementation of the NDCs, especially through their regional convening platforms where they bring together all stakeholders including governments, private and public sector and other international organizations, to leverage regional cooperation and promote learning. [IDN-InDepthNews – 18 November 2017]
Note: This story is based on two ESCAP News press releases.
Photo: A side event at COP23. Credit: IISD/ENB | Angeles Estrada
IDN is flagship agency of the International Press Syndicate.
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